IP Carrier

Netflix likely has proven that a streaming service does need to create original content to achieve market leadership, but also suggests such a firm does not need to own a separate content creation company to do so. Apple’s recent decision to acquire the services of Oprah Winfrey might also validate the principle.
Does that mean that Comcast, Verizon and AT&T (or other connectivity services providers) could do the same? That cannot be determined, as each has acquired content creation firms.
But there are other reasons why Comcast, AT&T and Verizon have done so. Ownership of content assets, at scale, creates the foundation for advertising revenue streams, wholesale content revenue streams and some retail bundling opportunities as well.
That matters as content creation and aggregation might represent as much as 70 percent of the total value of the TV content ecosystem, with distribution representing about 30 percent.
In other emerging ecosystems requiring distribution and connecti…

If you want to know why mobile service providers are so interested in internet of things, this graph suggests a key reason: sales of services and products to human beings using mobile phones is near saturation, and actually went to negative growth rates on two continents in the first quarter of 2018.
On other continents, growth rates were in low single digits. Africa and Asia are the two continents where double-digit growth continues to happen.






















source: Ericsson
Projections of potential IoT connectivity revenue also suggest why many tier-one service providers will be looking beyond connectivity, at other parts of the ecosystem, for new revenue and roles. Simply put, most IoT connections will not use the mobile networks.
Though mobile internet of things connectivity will grow fast, most of the connections will use some other form of connectivity, a couple of new forecasts suggest. However, by about 2023, mobile connections might take leadership, in terms of new sales.
That should provide …

With the exception of its buying Vodafone’s interest in Verizon Wireless for $130 billion, most of Verizon’s acquisitions have been far smaller. The overall pattern might indicate that Verizon spends most of its acquisition funds on network assets.
So it probably is not surprising that the choice of Hans Vestberg as the next Verizon CEO suggests to most observers an investment priority on 5G assets, not content or other “up the stack” assets, or even operating efficiencies.
Some of us would not necessarily agree with that view. It is true that Verizon sees itself as the leader in network quality and a first mover where it comes to each next generation network. Iin its acquisition strategies, Verizon has emphasized connectivity assets.
The issue is whether the choice of Vestberg suggests Verizon will focus its revenue growth plans on connectivity services, or has something else in mind. Some of us would argue that Verizon has something else in mind.
Verizon has for some time been acqui…

If approved, the AT&T acquisition of Time Warner might generate $31 billion in incremental revenue for AT&T. If Verizon is successful using its 5G network to attack a fixed wireless opportunity worth about $7.5 billion, and then add internet of things connectivity revenues of about $5.4 billion, that implies something like $13 billion annually.
Though debt levels are an issue, one might argue AT&T’s decision makes sense, despite the debt load issue, compared to a rival decision by Verizon to focus on 5G connectivity services.
That is, of course, assuming Verizon does not have other plans in mind, and even if AT&T cannot produce additional revenue, cost savings, reduced churn or other advantages from Time Warner assets.
And one wonders. If the AT&T acquisition of Time Warner is not approved, what other assets or investments could AT&T make to generate $31 billion in incremental revenue, immediately. Perhaps somebody else has an idea. My cursory check at other as…

The demise of long distance was the first indication that product life cycles operate in the telecom industry, as they do in all other industries. Decades ago, profits from the lucrative long distance calling business (driven by the business segment) were used to support money-losing consumer operations.
Once that ceased to be the case, service providers had to turn elsewhere for revenue and growth, notably to mobile services, which has been the global growth driver for decades.
Skype and other over the top alternatives have made the decline sharper.  
“Unintended consequences” might represent the more-significant of outcomes from the last two major transformations of U.S. telecom law.
The breakup of the AT&T system--a historical anomaly, as it turned out--was designed to “solve” the problem of high long distance prices. The Telecommunications Act of 1996 was intended to “solve” the problem of high prices for local telecommunications services.
The 1984 divestiture completely missed t…

Differences of opinion are what makes markets: for every seller there must be a buyer. And in the case of AT&T and some other tier-one service providers, those differences might tend to center on near-term issues such as debt loads, while longer-term strategic issues center on whether any tier-one service provider can make a sustainable business out of access services, and only access services.
In the former case, acquisitions such as DirecTV and Time Warner are problematic mostly because of the implications for debt load. In the latter case the objection is that investment capital should be spent elsewhere.
My own views are clear enough: surviving tier-one service providers must move up the stack, must take on additional roles in the  value chain, must develop big new revenue sources beyond connectivity.
In large part, that belief flows directly from the marginal cost or near-zero levels of pricing for all connectivity services. Pricing that falls to nearly zero is a problem for …